There seems to be a trend toward moving manufacturing and assembly to foreign countries where labor is cheap. Maybe it is cheap, but don't count too heavily on the savings, says Koehl. There are hidden costs, and chief among them is the loss of application engineering expertise.
What are the major issues in assembly and manufacturing today? There are at least two. First, there are some companies that are moving their assembly operations overseas to save money. It's a potentially false savings. Second, in North America, companies are pushing for automation at a feverish pace. That's a big challenge for manufacturers and for fastener companies. Successful automation of a process depends on components which facilitate minimum production downtime and total assembly defect rates (ppm). There is little tolerance for even one defect per million, and yet companies are willing to substitute automated production lines for labor intensive production lines overseas.
Why do you say there are potentially false savings from overseas manufacturing? There are two reasons. First is that currency rates will tend to equalize given free markets and the second major reason is that purchasing departments don't realize how much designers rely on their suppliers not only for product but for application engineering assistance. Overseas sources often don't provide that assistance because it is expensive and due to the distance and communication issues involved. Components may be cheaper, the assembly may be cheaper, but the expertise designers rely on won't be there to reduce the total cost of the product including field failures. If designers ask North American vendors for engineering advice but purchasing departments tell them the sourcing will be done overseas, there is no incentive for vendors to provide that advice because it's the final sale that pays for it, and they know they won't get the final sale.
Yes, but at least in the short run the manufacturers will save money, right? Maybe. But in the long run, overseas prices will rise too. Meanwhile, with the loss of sales, North American suppliers will lose their experienced staff that can provide the expertise designers are looking for. So, there eventually will be no engineering expertise available.
Is there a connection between cheaper labor and more defects? Yes. When you replace capital-intensive operations with labor-intense operations, you introduce the possibility of process variation. That can result in latent problems that aren't detected even in a final inspection. Manufacturers then have to fix those problems in warranty, and that's expensive.
Do customers understand the importance of bringing vendors into the design process early in the product-development cycle? No. They don't understand the concept of total cost and how a vendor who gets in early in the process can provide systems that reduce the possibility of failure. For fasteners, most designers think only of the primary function of a fastener and not about the other issues such as the assembly process.
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